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Price, Inc., is considering an investment of $366,000 in an asset with an economic life of 5 years. The firm estimates that the nominal annual
Price, Inc., is considering an investment of $366,000 in an asset with an economic life of 5 years. The firm estimates that the nominal annual cash revenues and expenses at the end of the first year will be $246,000 and $71,000, respectively. Both revenues and expenses will grow thereafter at the annual inflation rate of 2 percent. Price will use the straight-line method to depreciate its asset to zero over five years. The salvage value of the asset is estimated to be $46,000 in nominal terms at that time. The one-time net working capital investment of $10,500 is required immediately and will be recovered at the end of the project. All corporate cash flows are subject to a 35 percent tax rate. What is the projects total nominal cash flow from assets for each year
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